A SLIPP or a SLAPP? Schillings and the Revolut-ion

An interesting story in the FT last week saw Schillings deny misleading the FT. It relates to Revolut’s accounts. Their auditors BDO had provided a qualified opinion on the fintech company’s financial statements saying its overdue 2021 accounts gave a true and fair view but for a qualified opinion section which said it had, according to the FT, “been unable to satisfy itself of the “completeness and occurrence” of revenues within three business divisions totaling £477mn, 75 per cent of the group’s total reported revenues for 2021.” A public statement, backed up by two lawyers’ letters to the FT, “confirm that the ‘the financial statements give a true and fair view'” of the company’s affairs. The FT have a professor of accounting calling the statement bizarre, and another person “with knowledge of the matter” saying, “the statement “was written by people who partly didn’t fully understand the nuancing of an audit opinion…”.” Top trolling of the urbane kind, I thought.

The FT say:

Revolut’s lawyers, Schillings, wrote two letters to the Financial Times demanding changes to a news report about the audit. The letters made claims similar to those in the public statement, including that “the annual report confirmed that the overall revenue generated by Revolut was correct”.

Whereas, to boil it down a bit to the essentials, the FT quotes a counter-argument:

two people with knowledge of the audit told the FT that …

…It was possible that true revenues could be higher than stated because some transactions could be missing, or lower because BDO had to resort to procedures such as checking sample transactions meaning problems could have been missed, said some of the people with knowledge of the audit.

And then the FT reports…:

Schillings said there was “a range of views on the meaning of the qualified opinion” but that it “would not . . . be correct to characterise the content of our letters as inaccurate”.

“The letters put forward our client’s position in a clear and unambiguous manner. This was not misleading and at all times we acted in line with our professional obligations.”

Interestingly the story also suggests that, “The group’s press and legal departments have been instructed not to take similar actions in future “without consultation”, said a senior company insider.” This rather suggests that some within Revolut decided to go hard at the FT without the Board being consulted.

This raises the interesting question as to whether there was sufficient due diligence on who the client was in this situation. Although it would be surprising if the law firm got this wrong, it does happen (see the RICS debacle for instance). In the current climate particularly, law firms may need to be careful with instructions on aggressive legal moves, bearing in mind Strategic litigation (can) instantiate* personal preferences within the client rather than the client’s interests fully understood. A SLIPP not a SLAPP, perhaps.

Whether the Board reining in legal might also indicate that the SRA’s SLAPP guidance has been thumbed in this case by the FT or Revolut is also an interesting question. The story makes no mention of any threats to litigate or formal complaints to the SRA. In any event, Schilling’s cannot have relished issuing their denial. And the Board’s reaction may do as much as the SRA to sponsor a more cautious approach in future.

*Apologies, a stretch just for a blog title. I know

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